Overtime without high production will hurt your shop's profit

[Joe Marconi]

Not every shop pays flat rate; for many reasons.  So, many techs are on hourly pay.  There is nothing wrong with hourly pay, as long as you have an incentive program in place that promotes high production levels to avoid complacency.  For hourly paid employees I strongly urge you to have a pay plan that rewards production levels on a sliding scale.  

As a business coach, I have seen too many times shops with low production levels and high tech payroll due to overtime pay. Overtime pay must not be used to get the jobs done with no regard to labor production.  Limit overtime and create a strategy that increases production and rewards techs with production bonuses.  By the way, there are many ways to incentivize techs, it's not all about money. 

Overtime without high levels of production will eat into profits and if not controlled, with kill your business. 

If your shop is an hourly paid shop, what incentives do you have in place to maintain production levels? 

[3PuttFever]

Joe, you make terrific points. I find payroll and motivation to be my largest challenge outside of finding good, reliable talent. I have spoken with accountants, read article after article, and even spoke with the US Department of Labor about payroll, FLSA and overtime. Unless you're a dealer you cannot pay Flat Rate to your Technicians as their only means of income that is exempt from overtime. If you're an independent shop you can pay a guarantee but if your staff work more than 40 per week you MUST pay overtime. Any overtime also needs factored into any production bonus. It's a hard formula to create. I'm going to lower my hourly rate to my guys and pay them a higher per hour rate when they eclipse labor hours in a pay period. It's going to upset one of my longest working Techs because he's comfortable with his hourly and overtime income. The hustle is gone from his step, thinking, attitude. Wondering what flat labor hours per week we should be using as a threshold. 

[dstremski]

Getting your techs to maintain a consistency in work flow is always a battle and probably has much to do with  individual habits. My approach has been to create a good work environment with employee communication. ( Taking time to talk with employees about their interests / family.  Compensation: I have chosen to use a lower hourly rate with a higher commission based on book hours. Shop hours are M-F , 8-5pm (40 hours) This gives techs a full weekend / family time.  Shop worked many years 6 days per week and longer hours. In today's environment I found it better to totally end overtime.  

[Joe Marconi]

On 11/3/2019 at 12:01 AM, dstremski said:

Getting your techs to maintain a consistency in work flow is always a battle and probably has much to do with  individual habits. My approach has been to create a good work environment with employee communication. ( Taking time to talk with employees about their interests / family.  Compensation: I have chosen to use a lower hourly rate with a higher commission based on book hours. Shop hours are M-F , 8-5pm (40 hours) This gives techs a full weekend / family time.  Shop worked many years 6 days per week and longer hours. In today's environment I found it better to totally end overtime.  

Great Points!  The work environment is critical on creating a work place that leads to high production, and high morale!

[JOEPROPER]

@3PuttFever How do you plan on introducing this new pay plan to your techs?  Meeting with all at the same time or individually?  Do you have concerns about your Sr tech leaving? Or even a Jr tech leaving?  What amount of billable hours does the higher rate kick in?  

Reason I'm asking is because I have similar situation that's been going on for a while now.  Complacency, you need me, I can do what I want attitude.  I would like to keep this tech on my staff, but need a strategy to address him.  

[3PuttFever]

Been gone awhile so I assume your situation is no longer a concern. I put in place a higher per hour wage and commission structure that would allow for solid income IF they produce. I'm having an issue with my Store Manager, too. I feel my Techs are good when they're busy and my Shop Manager likes to socialize too much. I'm going to hire another Service Writer and likely fire my Manager. Get someone good in here that I can train and depend on when I need time off. I've had my Manager for three years and he's not increased performance or outcome one bit. Almost fired him this summer but gave him another chance. It's been six months and he has made insufficient improvements. It's hard because I care about the guy.